An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland

Transcription

1 Dublin Institute of Technology Other Resources National Institute for Transport and Logistics An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland Edward Sweeney Dublin Institute of Technology, Claudia-Maria Wagner Dublin Institute of Technology, Follow this and additional works at: Part of the Business Administration, Management, and Operations Commons Recommended Citation Sweeney, E.:An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland. Invited Lecture, Queens University Belfast, October This Presentation is brought to you for free and open access by the National Institute for Transport and Logistics at It has been accepted for inclusion in Other Resources by an authorized administrator of For more information, please contact This work is licensed under a Creative Commons Attribution- Noncommercial-Share Alike 3.0 License

2 Edward Sweeney Director of Learning Claudia Wagner Senior Researcher An Analysis of Supply Chain Management and Competitive Solutions for the Island of Ireland

3 Agenda NITL Introduction - What is SCM? SCM Excellence Diffusion of SCM in Ireland Re-engineering Supply Chains Some Concluding Comments

4 Agenda NITL Introduction - What is SCM? SCM Excellence Diffusion of SCM in Ireland Re-engineering Supply Chains Some Concluding Comments

5 History of NITL Report World Class to Serve the World National Centre for Supply Chain Excellence Supported by the National Development Plan, managed by the Department of Enterprise, Trade and Employment, set up at the DIT April 1998

6 NITL Structure / Activities

7 Agenda NITL Introduction - What is SCM? SCM Excellence Diffusion of SCM in Ireland Re-engineering Supply Chains Some Concluding Comments

8 What is SCM? SCM provides the end customer with the right product at the right time, priced at the right level, in the right quantity and quality SCM as a major source of competitive advantage NITL s Four Fundamentals of SCM

9 Fundamental 1 - The Objectives of Supply Chain Management Supply Chain Management aims to achieve competitive advantage through: Enhanced Customer Service Optimised Costs and Investments

10 Fundamental 2 - Supply Chain Philosophy Source Processors Retailers Products & Services Information Flow Funds Flow Suppliers Distributors Consumer A product reaches the final consumer through a chain of companies which will typically include suppliers, processors, distributors and retailers.

11 The Weakest Link Without the right companies across the supply chain to work with, a company will never achieve true competitive advantage. In other words The supply chain is only as strong as its weakest link.

12 What is Supply Chain Management? Buy Make Store Move Sell Traditionally these functions are managed in isolation and often operate at cross purposes.

13 What is Supply Chain Management? Supply chain management integrates these functions by holistically managing the information, material and financial flows. Information and Money Buy Make Store Move Sell Information and Materials

14 What is Supply Chain Management?

15 Fundamental 3 - Management of the Flows Supply chain management integrates these functions by holistically managing the information, material and financial flows. Information and Money Buy Make Store Move Sell Information and Materials

16 Fundamental 4 - Management of the Flows Re-assessment of internal and external customer/supplier relationships. SCM is not a zero-sum game based on adversarial relationships SCM is a win-win game based on partnership relationships?

17 Why is SCM Important? Effective supply chain management can cut costs, improve service and enhance revenues and that s just the beginning Prof. P. Metz, MIT MIT Survey: Implementation of supply chain management in US resulted in: 50% reduction in inventory 40% improvement in on-time deliveries 27% reduction in order cycle time Nine-fold reduction in out of stocks

18 Why is SCM Important? Supply chain management lies at the heart of the Dell Direct model and, therefore, at the heart of Dell s business performance Michael Dell

19 Agenda NITL Introduction - What is SCM? SCM Excellence Diffusion of SCM in Ireland Re-engineering Supply Chains Some Concluding Comments

20 Characteristics of SCM Excellence

21 Characteristics of SCM Excellence Identification and measurement of customer service

22 Characteristics of SCM Excellence Identification and measurement of customer service because customer service sets the spec for SC design

23 Characteristics of SCM Excellence Identification and measurement of customer service because customer service sets the spec for SC design Integration of supply chain activities and information

24 Characteristics of SCM Excellence Identification and measurement of customer service because customer service sets the spec for SC design Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations

25 Characteristics of SCM Excellence Identification and measurement of customer service because customer service sets the spec for SC design Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations SCM a senior management function

26 Characteristics of SCM Excellence Identification and measurement of customer service because customer service sets the spec for SC design Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations SCM a senior management function because SCM is a strategic activity

27 Characteristics of SCM Excellence Identification and measurement of customer service because customer service sets the spec for SC design Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations SCM a senior management function because SCM is a strategic activity Establishment and measurement of supply chain KPI s

28 Characteristics of SCM Excellence Identification and measurement of customer service because customer service sets the spec for SC design Integration of supply chain activities and information because many supply chain NVAs are caused by fragmented supply chain configurations SCM a senior management function because SCM is a strategic activity Establishment and measurement of supply chain KPI s because what gets measured gets done!

29 Agenda NITL Introduction - What is SCM? SCM Excellence Diffusion of SCM in Ireland Re-engineering Supply Chains Some Concluding Comments

30 The Evolving Strategic Context Internationalisation (or globalisation) of supply chains Vertical disintegration Changing role of the SC in strategic differentiation

31 Context: importance of SCM in Ireland Potential operational benefits (supply chain economics and customer service) Open economy (imports/exports proportion of GDP) Transport only one, and not most important cost, therefore location not a significant disadvantage Relatively small companies often part of a global supply chain Can manage virtual supply chains from Ireland

32 How Do Irish Companies SCM Barometer - Methodology Survey instrument Measure sent to sample frame Up? of 1,655 companies across all sectors in Ireland; Response rate is 65% (1073 organisations). Less than 50% measure customer service formally and those have very limited measurements Sample characteristics: Companies score low in relation to having the 85% of the sample are small and latest medium supply size enterprises; chain IT and having them integrated across 75% are the indigenous supply firms; chain The food and consumer sector Less represents than 25% 20% of the have total sample; a formal logistics position and Industrial in less products than represent 4% 47%; is it at Board Level International services represent 25%. Few companies had clearly defined SCM KPI s (Source: NITL SCM Barometer, 2004)

33 How Do Irish Companies Some Key Findings Measure Up? Less than 50% 57% measure customer service formally and those have very limited measurements Companies score low in relation to having the latest supply chain IT ICT and and having them them integrated across integrated the across supply the chain supply chain Less than 20% have a formal logistics position and in less than 4% is it at Board Level Few companies had clearly defined SCM KPI s (Source: NITL SCM Barometer, 2004)

34 How Do Irish Companies Some Key Findings: integration Measure Up? of SCM activities 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100.0% Less than 50% measure customer service formally Customer Service and those have Sales Order very Processing limited measurements Procurement/Purchasing Companies score low in relation to having the 1 - not at Production Planning and Control latest all supply chain After Sales Service IT and having them integrated integrated across 2 Customer Relationship Management the supply chain 3 Outbound Transport 4 Less 5 - fully than 20% Inventory have Management a formal logistics position integrated Warehousing and in less than 4% is it at Board Level Inbound Transport Few companies New Product had Introduction clearly defined SCM KPI s Demand Forecasting (Source: NITL SCM Barometer, 2004) Total

35 How Do Irish Companies Some Key Findings Measure Up? Less than 50% 57% measure customer service formally and those have very limited measurements Companies score low in relation to having the latest supply chain IT ICT and and having them them integrated across integrated the across supply the chain supply chain Less 9% have than a 20% formal have SCM a formal position logistics position and Few in companies less than had 4% is clearly it at Board defined Level SCM KPI s Few (e.g. companies 59% of companies had clearly do not defined know SCM their KPI s total supply chain costs) (Source: NITL SCM Barometer, 2004)

36 How Do Irish Companies Some Key Findings Measure Up? Less Overall: than SCM 50% positively measure related customer overall service company formally and performance those have very limited measurements Companies Pockets of SCM score excellence low in relation but much to having room the for latest improvement supply chain IT and having them integrated across Excellent the or supply good SCM chainpractice: <10%; Less Reasonable: than 20% ~30%; have yet a formal to establish logistics SCM position and programme: in less than ~60% 4% is it at Board Level Few Large companies MNC vs. Indigenous had clearly SME defined SCM KPI s (Source: NITL SCM Barometer, 2004) Future plans?

37 Some Barriers to SCM Excellence Inefficiencies are often built into the supply chain Communication structures ineffective and exchange of information poor Culture inappropriate Excessive reliance on forecasting and stockholding Managing problems, rather than eliminating their causes

38 Future Challenges Ireland moving into 2nd Generation SCM SCM moving up the value hierarchy Supply chain: becoming more virtual and international Need for robust supply chain design/reengineering

39 Agenda NITL Introduction - What is SCM? SCM Excellence Diffusion of SCM in Ireland Re-engineering Supply Chains Some Concluding Comments

40 Re-engineering Supply Chains Re-engineering = analysing + planning improvement + implementing improvement There is no magic solution Beware of copying inappropriate solutions BUT! There is a logical and systematic way of addressing the issue

41 Understanding Customer Service Market Driven Customer Service Strategy Performance Specification for Integrated Supply Chain Management The basis of effective re-engineering and change

42 Supply Chain Organisation The organisational shape of the future? Internal network arrangements Shared Services External network arrangements Think process and effectiveness NOT function and efficiency

43 Technology: the great enabler? Key role as an integration enabler Piecemeal and tactical approach to integration and to IT/IS development Multiple standards, processes and platforms Internally Across the supply chain

44 Does IT Matter? Information Enablers and Drivers Most IT solutions are no longer likely to provide strategic advantage, but simply the business basics (IT is imitable) The competitive advantage for companies will originate from developing creative information technology strategies and implementing them superbly Focus on process and people NOT on systems and hardware

45 Supply Chain KPIs in World Class Companies relates to company strategy (and stakeholders) incorporates non-financial measures limit the number of measures measures change over time measures simple and easy to use fast feedback to staff learning experience KPIs: the only rational basis for continuous improvement

46 Towards A Supply Chain Re-engineering Roadmap Market Driven Customer Service Strategy Performance Specification for Integrated Supply Chain Management Internal network arrangements The only rational Integrated SC basis for continuous Process improvement KPIs Think process and Shared Services effectiveness External network arrangements Development and implementation of creative ICT strategies Focus on process and people

47 Agenda NITL Introduction - What is SCM? SCM Excellence Diffusion of SCM in Ireland Re-engineering Supply Chains Some Concluding Comments

48 Some Concluding Thoughts Standing still = falling behind Innovation in all aspects is the key to survival Remember that most innovation is a series of small steps Re-engineering must focus on service delivery, integration, organisation and performance measurement People and learning are critical success factors